Effects of Donald Trumps Trade Policy

Effects of Donald Trumps Trade Policy Normative Effects and Prospects on President Donald Trump’s Protectionism Abstract A newly elected president of the United States of America, Donald Trump has been acknowledged for several radical policies. Concerns from all over the world for his protectionism has risen as he took steps to enforce policies. The United States has been reviewing free trade agreements (FTA) with numerous countries, attempting to impose a tax on foreign products so, domestic manufacturing industries could able to compete and outsell. In short term, it would create the instant profit. There were mainly two concepts of protectionism; imposing a tax on foreign products, and limiting the number of imported goods. However, there were professional worries internationally, even inside of this country as well. There were feasibilities to lose domestic corporations’ willingness to invest in research and development and competitiveness in other countries, resulting in degeneration of domestic industry. Foundation of Study Donald Trump’s Presidential election attracted worldwide attention. There are lots of views that are conflicting each other on the new U.S President’s political outlook. Protectionists argue that protection will lead to greater prosperity and strength (Merry, 2016). Trump’s base is profoundly suspicious of American engagement abroad. He opposed stubbornly of Clinton on foreign policy. He has doubted what the U.S. gets out of core alliances with NATO, Japan and South Korea (Powell, 2016). One the other hand, anti-protectionists assert that the changed policy will boost the rate of inflation and ultimately depress U.S exports. This new condition is an ill bode for the proposed twelve-nation Trans-Pacific Partnership, designed to usher in a new generation of free-trade deals (Merry, 2016). This research examines how Trump’s shift in trade policy will affect U.S. Background of the Problem Protectionism is the opposite term with free trade that is trying to close and isolate its country by giving control, like taxing goods and services made from overseas. Trump wants to protect American manufacturers and workers by throwing away the free-trade principle. All of the policies regarding international trade, protectionism in this research, such as the decision to withdraw from the TPP, decision to renegotiate NAFTA and FTA, and decision to impose great amount of tariffs (Panchak, 2016), contain strength and weakness, and entail positive and negative impact on global economy: Therefore, politicians must undergo prudence process of thinking and meeting in every respect, includes (a) advantages on protectionism, (b) disadvantages on protectionism, (c) opposite policy’s merits and demerits (free trade), and (d) solution. Problem Statement The United States, as well as other various countries, had taken action to protect their home industries after the global financial debacle. The international financial crisis caused not only economic uncertainty about the world economy, but also delay on economic recovery after the global financial debacle. Especially, the United States posted a huge amount of trade deficit for several years (Hannon, 2016). Trump attributes the cause to other partner countries. For example, he blames that China had been manipulated their currency selfish interest, and exerts his pressure to administration to trading partners. â€Å"Donald Trump says he’ll declare soon after he takes office that China is a currency manipulator because it is devaluing the yuan against the dollar. He may want to rethink that. These days China is intervening in the capital markets to prevent the yuan from going into free fall. The currency is now close to an eight-year low, down 12% from its peak in January 2014 (Wall Street, 2016).† Today’s enthusiastic debate over US trade policy with the vast tariff debate of the late 19th century. The 2016 presidential campaign trumpets the return of protectionism. Mirroring the paranoia of Republicans past, those who support free trade initiatives are now charged with being part of a great conspiracy to attenuate American democracy (Palen, 2016). The central research question examined in this study is the following: How will the revised policies, originated from â€Å"Make America Great Again† campaign, affect the U.S and other countries? Presentations of Findings Protectionism helps domestic industry in competition by charging high imported tax to foreign products. There is unfortunate story that imports killing the Mon Valley caused by the free trade. It states, â€Å"The more I read of local businesses and factories shutting down, workers being laid off, towns dying as imports soared. The more I began to ask myself, the price of free trade in painful† (Merry, 2016). However, Protectionism’s negative effects would hit even more to the U.S. – the world’s largest economy – while restricting export markets, increasing prices of imported goods and services for consumers and producers. Even for the U.S., three quarters of the world market in financial terms, and 95 percent of the world’s customers in people terms, lies outside its borders, it is not just a domestic matter. A protectionist U.S. economy focused only on its domestic market can never match the advantages of orientation to a global economy. Fo r Germany, 95 percent of its potential market is outside its borders, for Brazil 97 percent, for Australia 98 percent, and for Thailand over 99 percent. Such countries, therefore, applaud Xi Jinping’s unequivocal defense of globalization, not because of deference to China but from national self-interest because globalization really is â€Å"win-win† (Ross, 2017). One of the most important factor when choosing products among different brands, price takes a key role. No one would not want to pay more for the same quality of goods. For example, if the custom of the United States of the America imposes to the automobile of the Japan, not many customers want to buy Toyota’s Camry for forty thousand dollars when you could have Ford’s Fusion with the half price of Japanese cars’. In a first glance, it looks feasible and domestic companies gain the advantages in competition. However, there is a possibility that domestic corporations lose the willingness to invest in research and development (R&D) because they do not need them. If you can win the competition with less or no efforts, you do not want to struggle in R&D. There is an English example in the early era of the car industry. In England, when the automobile was developed in the 1990s, horse cars and automobile were competing. Due to the repulsion of horse car owners, the House of Parliament enacts the law limiting the speed of automobile that cars cannot outrun the horse cars. The law had been enforced for twenty years, leading the failure to compete in the automobile industry. This example does not relate with the protectionism, but it gives a lesson when there is no competition, the competitiveness do not get stronger nor stay the same, it degenerates. In order to remain our competitiveness, ironically, domestic companies should struggle with others. Worse thing than losing competitiveness is other countries can do what we do. If we can impose taxes on foreign imports, they also can impose taxes on American products. Smooth-Hawley Tariff of 1930, for instance, which raised duties on some twenty thousand imported goods, in some instances to record levels. American economists had petitioned the president to veto the bill as economic poison. â€Å"Countries cannot permanently buy from us unless they are permitted to sell to us,† said the economists, echoing the views of that rustic Texan, Roger Mills, and the more we restrict the importation of goods from them by means of even higher tariffs the more we reduce the possibility of our exporting to them (Merry, 2016). Furthermore, we are already losing money on foreign markets, and if we lose our competitiveness for imposed taxes, we would never compete with anyone. The functioning structure of American economy is not supported by manufacturing. We make fortune from the Informat ion Technology (IT), out of state technologies, and finance. For example, Trump administration is reviewing the FTA between South Korea and the United States. We think we are not making fortune for the military we offer for them, and the products we export to them. Stupidly, it is not true that even though we are losing a fortune in trading our goods, but we sell our weapons. I am not talking about small firearms, but I am talking about the fighter flights, Terminal High Altitude Area Defense (THAAD) systems and so on. The deployment of Terminal High Altitude Area Defense is in South Korea. The approval of the South Korean government to deploy  THAAD  in the country in response to the intercontinental ballistic missile (ICBM) test of North Korea (LEE, 2017). At the end, we win the war while we lost some battles, losing hundreds of million dollars while earning hundreds of billion dollars. For another example, Mexico is currently the 3rd largest goods trading partner of the US, w ith $531 billion in bilateral goods trade during 2015. Goods exports totaled $236 billion; goods imports totaled $295 billion. â€Å"Interestingly, 40 per cent of the parts in a typical Mexican product originate in US, illustrating that Mexico (and other countries such as Canada) are integrated into the US global supply chains, according to the Commerce Department. Hence, around 6 million US jobs depend on trade just with Mexico, according to the US Chamber of Commerce. Thus, tariffs on Mexican products could ultimately lead to loss of jobs in the US and degenerate the US economy, in addition to the impact on consumers (Shawn, 2017). There is a way to implement the protectionism that limiting the number of foreign goods. If there is a limit of the number of imports, there are limits of the fortune that the foreign countries would make. Likewise, it is a very shortsighted idea, resulting in degeneration of domestic industry again. The invisible hand is well-known terminology for the free market that the economy is controlled by the supply and the demand. Every time the government tried to manipulate for its own favor, the results did not follow the expectation like a football ball. Multiple economists and analysts expressed their pessimism about the potential benefits of protectionism, a trend that is expected to increase in line with populist political movements in Europe and the US. â€Å"Past practice shows that trade protection is both costly and ineffective. High tariffs translate into higher prices both for consumers and companies. Protectionism disproportionately hurts poorer households who spend a greater share of income on traded goods,† said Gary Hufbauer, Senior Fellow at the Peterson Institute for International Economics, and former deputy assistant secretary for international trade and investment policy of the US Treasury (Shawn, 2017). There is a point that the United States was a young and lively nation, rich in resources and geographical advantages, populated by a robust and expansionist people, beneficially situated upon the American continent, facing two oceans. Its destiny seemed secure irrespective of fiscal policies at any given time or the political passions unleashed by the tariff issue (Merry, 2016). Reflections Trumps protectionism would lead negative impacts on domestic and international industries. We must think if we can do on foreign goods, then they also can do on domestic exports like imposing taxes or limiting the number of products. I admire his effort to vitalize United States’ economy with politics, however, his protectionism has too many risks that might result in the collapse of the economy like the one of Japan in the late 1990’s. There was a long-term stagnation and instability of the Japanese economy in the 1990s (so called â€Å"lost decade†). Especially of the protracted deflation and insufficient final domestic consumption, the asset price bubble collapse at the beginning of the 1990s has probably activated and amplified impacts of other complicated processes in the economy. The blast of the bubble has negatively impacted both Japanese financial sector and production and investment activity of Japanese companies and so on (Zuzana, 2012). It is not the government who make decisions to make the America great again with the strong economy, but it is the corporate themselves with lots of creative ideas and competitiveness to compete with foreign businesses. Conclusion To sum up, such a considerable alteration in policy, strategy and tactics will hardly be easy. It will meet strong headwinds in today’s domestic political climate (Ezrati, 2016). We do not know the consequences of our protectionism policy to the domestic economy and international markets. Although there are concerning voices against the policy, quoting trial and error of foreign countries, we would not know the results until we know the result. Some dislike not the only protectionism for losing our ability to fight against others, but also eventually we lose the competition at the end as result of a negative cycle of degeneration induced from eliminated benefits from the fair competition. These might be the reasonable concerns, however, we cannot ignore the instant impact the protectionism would have to our economy because the crowd has spoken with the media of vote. Trump was elected thanks to his radical policies, including the protectionism, and that is what the majority of people want in the United States. As the president of this country, he has to implement what he promised to us during the election. If the protectionism is going to lead bad sequences of our economy, he should reconsider the foreign policies but that is not the end of his job. He needs to come up with different policies pertaining to both domestic and international businesses to facilitate to get out from the era of economic depression. When you watch the news, there are still protestors against Trumps administration, nevertheless, if he can make America great again, the voices against him would disappear along with the concerns questioning his ability as our president. Politics and economy are like betting for the gamble. Even though you have all data and calculated expectation, still players bet for the probabilities. What they do is eliminate the unlikelihood and maximize the probability of what they bet. Protectionism is a gigantic bet playing where participants are coming from the all of the worlds. Alea Iacta Est; it is a dice is cast in Latin. Trump’s protectionism would have impacts on the domestic economy and foreign countries. We do not know the future yet hope these policies make America great again. References Ezrati, M. (2016). Defending free trade. National Interest, 144, 51-55. Hannon, P. (2016, November 26). Global trade rebound threatened by protectionism after trump victory. Wall Street Journal, 1. LEE, B. (2017). THAAD deployment in South Korea. Harvard International Review, 38, 34-37. Merry, R. W. (2016). Protectionism in America. National Interest, 146, 28-36. Palen. M (2016). The return of protectionism. History Today, 66, 6. Panchak, P. (2016). Trump and trade. Industry Week/IW, 265, 6. POWELL, B. (2016). How’s that gram you?. Newsweek Global, 167, 12-15. Ross, J. (2017). Weeks when decades happen: Global thought leadership passes from the U.S. to China at Davos. China Today, 66, 40-43. Shawn, T. (2017). The promise and the peril of the Trump economy.  Fortune, 175. Zuzana, S. (2012). Japan’s lost decade: On the development of the Japanese economy in the 1990s.  Journal of International Relations,  4. (2016). Trump’s Chinese currency manipulation. Wall Street Journal.

Analysis of Mozart’s K. 515 Mvt. 1

Wolfgang Amadeus Mozart Quintet No. 3 in C major, K. 515 Andrew McGuire Dr. Burkart MUSHIS 200 11/19/2012 Wolfgang Amadeus Mozart was a prodigy of his time, and arguable the greatest of all time. This paper will discuss an analysis of his third string quintet in C major, K. 515. Through this piece in Sonata Form we will dissect the exposition, the development, the recapitulation, and the coda; along with an analysis of the quintet we will briefly discuss parts of Mozart’s life, as well as look at the background of the Viola Quintet No. 3 in C Major, K. 515.Wolfgang Amadeus Mozart was born into a musical family after his sister Nannerl, by his father and mother Leopold and Anna Maria. His beginnings would originate in Salzburg, Austria (Eisen). As much is known about the education of little Wolfie we see that his father Leopold is responsible (Jeffery). We also discover that it was not just his musical education that concerned his father but other areas as well, such as arithme tic, reading, writing, and literature (Eisen). Much is not know about the mother of Mozart. She was born into a middle class non-musical family.His father, on the other hand was an accomplished musician and teacher born into life as a choirboy. The nearest compositions to Wolfie’s K. 515 are a second string quintet K. 516 and one of his better known Operas Don Giovanni. Taking a short break from Don Giovanni Mozart would set off to write a pair off string quintets. K. 515 and K. 516. Written the age of 31, the better-known two of the pieces is the g minor quintet (K. 516), and the C major quintet (K. 515) is regarded as the finer of the two. Almost a month would separate the composing of the sister quintets both written for double viola.During the time of the second quartet would be the passing of his father, and some say that there may be a relation between the key of the g minor and the passing (Christiansen). This dual viola is different for the time, even given that Mozar t preferred viola, was seen as odd. The number of his six viola quintets is seen as rare in comparison to the 66 cello quintets written by Boccherini. Even though these quintets maybe rare in amount, many consider them the finest of the string quintet repertoire (Christiansen). The finer of our finest quintets begins in C major. The longest part of the first movement is undoubtedly the exposition.In the first of the one hundred and thirty-one measures of the exposition we see our first theme (see Figure 1). Figure 1 Ninety-four measures later we see our second theme (see Figure 2). Figure 2 Throughout the piece we will see our two themes return continuously in multiple keys. Anytime we see theme one return we see the two lines played between only the first violin and the cello. We see similar segregation for theme two with the first and second violins. The one time we see the violas given a theme to play is in the coda, and will be discussed later, this theme we will see is theme tw o in C major.Listening further we discover that our development turns out to be the shortest part of the piece (Absil). Theme one reappears again in the beginning of the development section, only this time we see the theme appearing in the dominant of the piece (see Figure 3). Figure 3 As the development progresses we also see theme two return as well in its original key, the harmonies we see differently, only briefly because it will be what leads us into the recapitulation (see Figure 4). Figure 4 At the end of our very brief development we arrive at our recapitulation.In the recapitulation we see the return of both of our themes in the tonic key. Throughout the recapitulation we see our theme variations return as well in the tonic key. What is found most notable about the recapitulation is the way it ends. One might assume that it would end on the tonic or dominant, because of its movement to the coda, however we find the end of the recapitulation as a vii °65/V (see Figure 5). Figure 5 We can argue the beginning of the Coda here because of the bar of rest. This theory separates the two sections allowing us to make a clear observation where one ends and the other begins.As with codas we find our final theme in the piece the part proceeding the measure of rest (see Figure 5). Delving deeper into the coda we find theme two reoccurring in the tonic key, this time not segregated by instrument parts. For the first time in the movement we see the two viola parts obviously playing what is the theme (see Figure 6), right before we see the second viola briefly mingle with the cello. Figure [ 6 ] After the brief return of theme two between the cello and violas we end happily on the tonic of the piece. Overall I thoroughly enjoyed this piece.Not only this piece but also this assignment. It is one thing to sit in class and read about and take notes over sonata-allegro form. It is completely another to be expected to dive deeper into a piece and try to figure out its i nner most workings. As a violist I also appreciate the fact that Mozart went against the normality of the cello quintet and wrote a viola quintet. The fact he was willing to go against what was expected of him by society makes me respect him as a composer even more. After a glimpse into the life of Wolfgang Amadeus Mozart, we have discussed his Quintet No. 3 in C major.Discussed its themes and their placement, as well as briefly the variations of these themes. We also saw a brief glimpse into history around the time that the K. 515 and what could be considered its sister K. 516 were written. Works Cited Absil, Frans. â€Å"Musical Analysis: Visiting the Great Composers. † (2005): 8. Absil, the Netherlands. Sept. 2012. Web. 7 Nov. 2012. . Christiansen, Kai. â€Å"String Quintet (viola) No. 3 in C Major, K. 515. † Mozart. Music at Kohl Mansion, 2012. Web. 7 Nov. 2012. . Cliff Eisen, et al. â€Å"Mozart. † Grove Music Online. Oxford University Press. Web. 18 Oct. 2 012. http://www. oxfordmusiconline. com/suscriber/article/grove/music/40258pg3. Gallagher, Sean and Thomas Forrest Kelly. The Century of Bach and Mozart: Perspectives on Histoiography, Composition, Theory, and Performance. Cambridge, Massachusettes: Harvard University Press, 2008. Print. Jeffery, G. â€Å"Mozart, Maria Anna â€Å"Nannerl†Ã¢â‚¬  Mozart, Maria Anna â€Å"Nannerl† N. p. , 1998. Web. 5 Nov. 2012. . Kerst, Friedrich.Mozart: the Man and the Artist Revealed in His Own Words. New York: L. Dover Publications, 1965. Print Mirka, Danut. Metric Manipulations in Haydn and Mozart: Chamber Music for Strings, 1787-1791. Oxford, New York: Oxford University Press, 2009. Print Mozart, W. A. String Quintet No. 3 in C major, K. 515 (I). Alban Berg Quartet. EMI Classics. CD. Mozart, W. A. String Quintet No. 3 in C major, K. 515 (I). Fine Arts Quartet. Musical Concepts. CD Mozart, W. A. Quintet in C Major, K. 515 (I). Wolfgang Amadeus Mozarts Werk, Serie 14: Quartette fuer streichinstrumente. Leipzig: Breitkopf und Haertel, 1877-1910. 1-12. Score.

A Problem Question on Tort Law - Free Essay Example

Sample details Pages: 8 Words: 2387 Downloads: 9 Date added: 2017/06/26 Category Law Essay Type Case study Topics: Duty Essay Tort Essay Did you like this example? 1 Question 1 Yes, Barack is liable to Theo-Paul under the tort of negligence. The negligence part of tort law involves unintentional harm caused by oneà ¢Ã¢â€š ¬Ã¢â€ž ¢s carelessness. Proving negligence entitles the injured plaintiff to being compensation for the injury to their body, property, emotions, financial status, intimate relationships or reputation. Don’t waste time! Our writers will create an original "A Problem Question on Tort Law" essay for you Create order One must prove the resulting harmso as to succeed in a bid tobe compensated in a negligence case.[1] The case of Donoghue v. Stevenson [1932] lays the foundations of the fault principle in common law. The plaintiff, who is May Donoghue, drank a bottle of gingerbeer that was given to her by an acquaintancethathad purchased it personally from a shop. The ginger beer was made and sold by a manufacturer who happened to be David Stevenson located in Scotland. While MayDonoghuewas drinking the beer, he stumbled upon the remains of a decomposing snail. She then sued Stevenson though there lacked a relationship of contract since the friend had made the purchase. This prevented a direct action against Stevenson. However, later on it was allowed due to an implied warranty. This was the warranty of fitness of use of a product in a completely different category of tort. The biblical passages to love thy neighbour was interpreted as the legal requirement to not harm thy neighbour by Lord Atkin who then went on to define a neighbour as any person who is directly affected by an act that onereasonably ought to have them in mind as being so affected when one is committing the acts or in other cases the omissions in question. The main point of this case was the extension of the concept of duty of care. The first principle of negligence is that reasonably foreseeable injury must be compensated.[2] In the landmark case in consumer law in Australia of Grant v The Australian Knitting Mills ([1936] A.C. 562), the plaintiff, Dr Grant, become ill as a consequence of wearing woolen underpants that was been manufactured by the defendant milling company trading under the name à ¢Ã¢â€š ¬Ã‹Å"Australian Knitting Mills Ltdà ¢Ã¢â€š ¬Ã¢â€ž ¢. The underpants in question contained an excess of a chemical known assulphite. He wore them just after purchase for one entire week without washing them before doing so. The Privy Council held that the defendants were liable to the plaintiff for th e injury he suffered.[3] In the more recent English case of Caparo v. Dickman [1990] brought to jurisprudence a threefold test to establish a duty of care. First, the injury must bereasonably foreseeable in that there must be a link of proximity between theinjured plaintiff and negligent defendant and lastly it must be fair, just as well as reasonable to impose liability upon the defendant. However, a big portion of the principles are still at the judgesà ¢Ã¢â€š ¬Ã¢â€ž ¢ discretion. This test only act as a guide for the courts to examine the duty of care owed to the plaintiff by defendant. As common law jurisprudence grows, the courts have had to grow out of the threefold test established in the case of Caparo v. Dickman [1990] and adapt to the changing times. As a result new elements and principles have had to be developed and others scrapped off but they all have justice as their main inspiration. The first element to be proved is that the defendant in this case Barack was truly under a legal duty to act in a particular way towards the plaintiff, Theo-Paul. Barack as a seller of a commodity is under duty to ensure that the commodities he sells are fit for use and are of a merchantable quality. It is important to note that unlike a breach of contract suit, tort cases are not overly hinged upon an agreement between the parties in a suit.[4] Secondly, it must be proven that the defendant has breached the legal duty he was under by failing to act accordingly. Barack has indeed breached his duty as a seller by failing to make sure that the ladder he sold to Alfonse is fit for use in the manner in which it was designed. This is proved by the fact that Theo-Paul took reasonable care to completely unfold the ladder, fix the spreader arms and then proceeds to use it and unfortunately it falls apart and he falls hitting his head on the concrete thus suffering a serious brain injury. Furthermore, it is the first time the ladder was used. This shows that the l adder when sold to Alfonse was faulty. A similar case is that of Priest v Last (1903) the buyer bought a hot-water bottle from a chemist. His wife used the hot-water bottle and it burst leaving the wife was scalded. Evidence indicated that, the bottle was by nature not meantto be used as a hot-water bottle. The chemist was held liable for negligence. Finally, it is of utmost importance that the plaintiff provesthat he actually suffered physical injury or loss as a direct consequence of the defendants breach of the legal duty he was under. Theo-Paul falls as he is using the ladder Barack sold to Alfonse by Barack. He hits his head on the concrete and suffers brain damage as a result. He ends up being permanently unable to perform mental or physical work of any kind. He suffers from extreme migraines and has to be heavily sedated to ease his pain, these migraines will last his entire remaining lifetime. He is unable to carry on with his job where he used to earn $400,000 per year t hus loses income. In addition he is no longer able to play sports. He is left with a terribly poor quality of life. All this is attributed to the faulty ladder. Foreseeability is another element of negligence. The negligence must be a proximate cause of the injury. This is to say that if one can foresee something bad happening to another as a result of his actions then he should take reasonable measures to break the chain of events that lead to harming another. If a harmful result is unforeseeable then it is considered as being remote thus a claim for damages due to negligence must fail.In this case it would include Barack checking the ladder for faults and testing it before selling it to Alfonse. It is foreseeable that the person who is using the ladder will indeed get injured if the ladder is faulty. It was a dissenting opinion in the case of Palsgraf v Long Island Rail Road Co. that the defendant had a duty of care towards the plaintiff regardless of foreseeability. The fac ts off the case are that the plaintiff, Palsgraf, was injured by scales that were falling as she was on the platform. The scales fell because of a commotion. The train conductor went to help a man into a departing train. The man was transporting a package. The package was full of fireworks. It was shown that the conductor mishandled the passengerà ¢Ã¢â€š ¬Ã¢â€ž ¢s package and so it fell. The fireworks fell and exploded on the ground. This caused shockwaves through the platform. This made the scales fall. Palsgraf wasinjured by the falling scales and she then sued the train company which was the employer of the the conductor for negligence. In Australia however, the test of foreseeability was put to use by judges Kirby, Hayne and Callinan in the Perre v Apand[1999] case where plaintiff had a contract to sell potatoes. The defendant had supplied bad seeds which caused an infection in a land belonging to the plaintiffs neighbourSparnon. Regulations meant that potatoes planted close to infected land cannot be sold and therefore the plaintiffs potatoes were not accepted. The Plaintiff was the victim of an economic loss. The losses suffered by the Perres were a foreseeable result of Apands act of supplying the diseased seeds to them.[5] Factualcausation is also required for a liability of a defendant to be proved, it must be proven that the specific act or omission was the cause of the loss or damage suffered. The most common test is to ask if the injury would have happened without the accuseds breach of duty owed to the injured party. For Theo-Paul, he would not have gotten injured but for the faulty ladder bought from Barack. Question 2 Theo-Paul can indeed sue under Part 3-5 of the Compensation and Consumer Act 2010. This part is about liability of manufacturers for goods with safety defects.A safety defect is problem in a product that creates a risk of the consumer getting injured. The Act states that the manufacturer of a good is liable to compensa te an individual under the conditions that: the manufacturer supplies the goods in trade or commerce, the goods have a safety defect and the individual suffers injuries because of the safety defect. In this case, Theo-Paul took care to set up the ladder properly before using it and even then, it fell apart as he was using it and consequently he got a serious injury thus demonstrating that the ladder had a safety defect. [6] The Act also states that the injured individual has the right to bring an action against the manufacturer to recover the amount of the loss or damage that he sufferedas a result of the goodà ¢Ã¢â€š ¬Ã¢â€ž ¢s safety defect. The Act also goes a step further to make the manufacturer liable for any loss or damage suffered by an individual if the good was ordinarily acquired for personal, domestic or household use and is destroyed or damaged because of the safety defect. It should be shown that the person used the destroyed or damaged good for personal, domestic o r household use and the person suffered a loss or damage as a result of the destruction or damage to the property. The ladder did get damaged as Theo-Paul was using it at Alfonseà ¢Ã¢â€š ¬Ã¢â€ž ¢s home to remove leaves from the gutter and consequentially he got injured. Theo-Paul can also sue Barack under Part 2 of division 5-4 of the same Act that is about an action against suppliers of goods. The suit will be based on the grounds that there was a breach of the guarantee as toacceptable quality of the ladder in that it ought to be usable for all the use which such a goodissold for and in this case the ladder was unfit for use.[7] It was defective and unsafe. It is clear from the facts of the case that he did not cause it to become of unacceptable quality as he was using it in the way in which it was meant to be used. The supplier, Barack, is liable even if the loss or damage did not come about because of a business or professional relationship between him and Theo-Paul. Ques tion 3 There are different civil remedies that are available in Australian courts under Australian law. Among them is the award of damages where there are limits put in place.[8]The award of damages in essence should make the plaintiff whole again and be sufficient to take the injured back in the position he or she was before negligent act of the defendant, also known as indemnification. Anything that is more than the actual cost of compensation will in effect unlawfully allow a plaintiff to profit from the tort. Loss of earnings is calculated as the net earnings a plaintiff would have had, if they had not fell victim to the injury which for Theo-Paul is $400,000 a year less the net earnings they have after the injury for which is nothing in his case. The court if obliged to consider how much the plaintiffà ¢Ã¢â€š ¬Ã¢â€ž ¢s ability to earn income is be affected in the future and for how long this will continue. Other factors that need to be taken into account include taxation , discounting of future economic loss and discount for vicissitudes where a court will normally apply a 15%. It is assessed as a lump sum. From the suit of negligence against Barack, Theo-Paul will receive special damages to cover medical expenses incurred and the loss of earnings to the date of trial. In the award, Theo Paul will also receive General damages to cover the loss of earning capacity in the future, pain and suffering and loss of enjoyment of life. Question 4 Damages caps can be defined as a set of laws that regulate the amount of non-economic damages that can be awarded to the plaintiff for a case.[9] The term Non-economic damages refer to all other categories of damages such as emotional distress, suffering and pain that are difficult to quantify in monetary form. There are two rationales that have led to the institution of damages caps. Firstly, damages caps are used to avoid the high costs encountered by traders in doing business which eventually pass on to the consumer by mitigating the liability of service providers. When the cost of insurance for service providers rises, the cost of the service rises too. This then means it will be more costly for the service providers to trade, which ultimately means that consumers will have to pay more to cover these increased costs.[10] Secondly, damage caps are used to discourage frivolous or malicious lawsuits. Courts seekto ensure that the justice system is used only by people who are honestly injured and are seeking compensation. [11]At times some people will file a law suit for the sole purpose of obtaining a big pay day when they have not suffered. Bibliography [1] Paul Latimer, Australian Business Law 2015, Thirty-fourth Edition, Oxford University Press, pp 125 [2]Pam Stewart and Anita StuhmckeAustralian Principles of Tort Law,3rd edition, The Federation press, pp 70 [3]Liability for Defective Products Bill, 1991: Second Stage, SeanadÃÆ'†°ireann, Vol. 130, 14 November 1991. [4]Steven Rares, Striking the Modern Balance Between Freedom of Contract and Consumer Rights, 14th International Association of Consumer Law Conference Sydney, 2 July 2013, Accessed at https://www.fedcourt.gov.au/publications/judges-speeches/justice-rares/rares-j-20130702 [5]Sappideen, Vines, Grant Watson, Torts: Commentary and Materials (Lawbook Co, 10th ed, 2009), pp. 311-324 [10.45]) [6] The Compensation and Consumer Act 2010,Part 3-5 [7] The Compensation and Consumer Act 2010, Part 2 of division 5-4 [8]Australian Government , Australian Law Reform Commission, Australian remedies: misappropriation and other defaults, Accessed at https: //www.alrc.gov.au/publications/alrc-80-legal-risk-international-transactions/8-australian-remedies-misappropriation-an [9]Damage Caps, Accessed at https://injury.findlaw.com/accident-injury-law/what-is-a-damages-cap.html#sthash.fSWRnueQ.dpuf [10] IBID Note 3 [11]Ted A. Greve Associates, How Non-Economic Damages Caps Are Implemented and How Excessive are They?, Accessed at https://www.mydrted.com/non-economic-damages-caps/

Capital Structure Is Irrelevant For Studying Corporate Finance Example For Free - Free Essay Example

Sample details Pages: 6 Words: 1745 Downloads: 10 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? What is capital structure? Capital structure is the mixture of sources of funds in cluding long-term debt, specific short-term debt, common equity and preferred equity but excluding all short term credit.. Leverage firm means that firm uses to finance its assets. A firm with a lot of debt in its capital structure is said to be highly levered. A firm with no debt, it is called unleveraged. Difference industies have difference capital structure. Optimal capital structure is how to balance the cost of an enterprise to find a balance between the point of maximizing the value of the company or the cost of capital minimization. Due to changes in capital structure will affect the reported return on equity and stock prices, so the choice of capital structure is a very important decision Modigliani-Miller Theorem is a financial theory suggests that the market value of a firm is determined by its profitability, risk of the corporate and its related assets, it is an indep endent way to finance its investments or distribute dividends. The basic idea of the theorem is, the firm value will not affect whether a firm finances with debt or equity, under certain assumptions. The MM irrelevance proposition is developed in a world with perfect markets, so that there are no conflicts. In particular, there are no transactions costs, no taxes and no costs are incurred to induce mangers to maximize the value of the firm. In 1958, Franco Modigliani and Merton Miller (MM) proved, under a restrictive set of assumptions including zero taxes, that capital structure is irrelevant. The first irrelevance proposition, Proposition I in the 1958 paper titled The Cost of Capital, Corporation Finance and the Theory of Investment published in the American Economic Review, states that the market value of any firm is independent of its capital structure and is given by capitalizing its expected return at the () appropriate to its class. (Modigliani and Miller, 1958, p.268). T hat is, a firms value and cost of capital are not affected by its financing mix. A firms value will be determined by its project cash flows. The cost of capital will remain constant with leverage. As a firm increases its financial leverage, the cost of equity will increase just enough to offset any gains to the leverage. The method of arbitrage can be used to prove Proposition I. MM did not develop arbitrage but they made it a foundation of modern finance. MM assume that Financial markets are perfect and show that if Proposition I did not hold, an investor could buy and sell stocks and bonds in such a way as to exchange one income stream for another stream, identical in all relevant respects buy selling at a lower price. The exchange would therefore be advantageous to the investor quite independently of his attitudes toward risk. As investors exploit these arbitrage opportunities, the value of the overpriced shares will fall and that of the underpriced shares will rise, thereby tending to eliminate the discrepancy between the market values of the firms. (Modigliani and Miller, 1958, p.269). Arbitrage mechanism shows what MMs thinking is. Arbitrage opportunities can not be important due to market forces will intervene and make the price right. And MM think that arbitrage is not limited to current financial instruments and institutions. Because of this proof, we know that the value of a firm is not depends on its leverage if the financial markets are perfect. In a subsequent work in 1963, MM took corporate income taxes into account. Interest paid can be deducted before the payment of income taxes. It helps lighten the tax burden. It increases after-tax earnings to shareholders, so companies will choose to use more debit financing, high corporate debt ratios in order to achieve maximum shareholder value. Leverage will increase a firms value due to the tax deductibility of interest payments, leading to the conclusion that firms should pursue 100% debt finan cing. Obviously, when the debt ratio to 100%, business value can be maximize. However, in the real world, Finance Manager will not exceed the use of financial leverage, since a large bankruptcy costs may explain why the company did not give more consideration to the use of tax debt settlement. And actually most of the corporate have no debt financing. The evidence on bankruptcy and financial distress costs was that neither empirical research nor simple common sense could convincingly sustain these presumed costs of bankruptcy as a sufficient, or even as a major, reason for the failure of so many large, well-managed US corporations to pick up what seemed to be billions upon billions of dollars of potential tax subsidies. (Miller, 1991a, p.274). Later work by Miller (1976) that demonstrated the model with personal income tax to correct MM theory. It points out MM theory over estimate the advantages of debt financing. In fact, the personal income tax offsets to some extent a persona l interest income from investment. They have to pay the loss of personal income tax liabilities and reduce the companys pursuit of preferential corporate income roughly equal. (Miller, 1976) The addition of financial distress and agency costs to the MM corporate tax model or Miller model results in a trade-off model, in which the costs and benefits of using debt are balanced against each other, leading to an optimal capital structure that falls somewhere between zero and 100% debt. The MM models concluded that firms should pursue 100% debt financing. However, if firms continue to borrow, hence the larger the fixed interest charges, the greater the probability that a decline in earnings will lead to financial distress (i.e. financial leverage). In this case, the higher the probability that costs associated with financial distress will be incurred. Costs of financial distress include direct costs, indirect costs and costs of bankruptcy which is the most extreme form. Besides cos ts of financial distress, agency costs will be incurred when firms continue to use debt financing as shareholders might try to exploit the debt holders. When both the costs of financial distress and agency costs are ignored, according to MM, the value of a leverage firm is VL = VU + TD However, by including both the costs of financial distress and agency costs, the value of a leverage firm becomes VL = VU + TD PV(costs of financial distress) PV(agency costs). In this case, the optimal capital structure (the amount to be borrowed that maximizes the value of the firm) can be viewed as the trade-off between the benefits of debt (interest tax shield) and the costs of debt (costs of financial distress and agency costs). Financial distress and agency costs Debt Value of all equity financed firm PV of interest tax shields Value of levered firm Optimal amount of debt Maximum value of firm To summarize, the trade-off theory depicts the relationship between deb t ratio, cost of debt, cost of equity and the WACC. When leverage increase both cost of equity and after tax cost of debt increase steadily; and the increase accelerate when debt level is high, reflecting the probability of financial distress and agency costs; the WACC first decreases, hit a minimal and then begins to rise; when WACC is minimized, the firm value is maximized. Implications of the trade-off theory Although the trade-off theory does not answer to the question of optimal capital structure, it helps explain firms behavior about leverage. Firms with more business risk tend to use less debt than lower risk firm. Firms that have tangible assets such as real estates can use more debt than firms with mostly intangible assets. Firm that are paying taxes at a higher rate are likely to use more debt than firms with lower tax rates. In addition, the asymmetric information or signaling theory recognizes that managers, who have better information than mo st investors, tend to prefer a pecking order of financing first retained earnings and then debt and as a last resort only, new common stock. The signaling theory concluded that firms should maintain borrowing capacity reserve so that they can always issue debt on reasonable terms rather than have to issue new equity at the wrong time. Despite the unrealistic assumptions, MM laid the foundation of modern capital structure theory. Although the capital structure theory does not provide precise answers to the question of optimal capital structure, it provides a systematic way of analyzing the effects of debt versus equity financing. In practice, we observe that there is a wide variation in capital structure, both across industries and among individual firms within industries. The variations across industries can be explained to a large extent by the economic fundamentals of the industry. Variations within industries also reflect fundamental differences, but they additionally refl ect differences in managers attitudes toward debt. An important contribution to the theory of capital structure is not only to put forward the financial proposition if there is an optimal capital structure and there is an objective of the optimal combination of capital structure and make our capital structure has a clear understanding of the following: (1) A debt financing is the lowest-cost of financing in various funding sources in the enterprise due to interest paid before enterprise income tax, and the creditors bear the risk is small than investors relatively. They required a lower rate of return, so the cost of debt financing is usually the lowest. When there is the case of corporate income tax, debt financing can reduce the consolidated capital costs and increase earnings. (2) Lowest-cost means of financing may not be the best means of financing As the role and impact of financial distress costs and agency costs, over-debt will be offset by increased tax revenue. Because, as the proportion of the increase in debt, corporate interest expense to increase, companies increase the possibility of insolvency, corporate financial risk has increased. At this time, both corporate investors and creditors will ask for the appropriate compensation, which called for increased return on capital so that integrated enterprise cost of capital increased substantially. (3) Optimal capital structure is a kind of objective existence Debt financing for capital costs are lower than the other methods of financing, but not with the level of the individual cost of capital as a measure of the standard, only when the total cost of capital of the companies is the lowest, the level of debt is more reasonable. Therefore, Enterprises in the financing decisions need to continuously optimize the capital structure to become more reasonable, until they reach the lowest-cost integrated capital structure Enterprises to maximize this goal will be achieved. Don’t waste time! Our writers will create an original "Capital Structure Is Irrelevant For Studying Corporate Finance Example For Free" essay for you Create order